North Carolina Gaming Tax Guide

North Carolina Tax Rates

North Carolina is a full-service sports betting market that hosts both retail and online sportsbooks for locals. Tax revenue from sportsbooks will be distributed to youth sports, local colleges, including Historically Black Colleges and Universities, and responsible gaming, among other things. Let’s break down everything you need to know about NC sports betting taxes.

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Paying Taxes on your Sports Betting winnings

State Taxes 5.25%

There is a state tax rate set on sports betting winnings in North Carolina. Sports bettors will be taxed a flat 5.25% rate on winnings on both mobile betting apps and at retail sportsbooks. Losses will be able to be deducted from winnings claimed. For example, if a bettor wins $10,000 in wagers but loses $4,000, they will only be taxed on the $6,000 won. The 5.25% tax rate is applied to any winnings regardless of amount.

Federal Taxes 24%

There is a federal tax rate for winnings from sports betting. Gambling winnings, including sports betting winnings, are fully taxable with withholdings up to 24%. Total withholdings are determined by income and how much bettors win and deduct after losses.

What Are The Sports Betting Tax Rates In North Carolina

Sportsbooks in North Carolina will be taxed at an 18% rate. The initial proposed tax rate was 14%, which was amended in the Senate. The 18% tax will be placed on both retail and online sportsbooks. Operators will be taxed on revenue, with no deductions for promo spend. The North Carolina Lottery Commission will oversee the taxation of sportsbooks in the Tar Heel State.

North Carolina Sports Betting Tax Expectations

North Carolina is projected to rake in over $65 million in taxes in the first year, with more than $100 million annually expected by year four. Neighboring markets in Tennessee and Virginia give a glimpse into how NC could look. Tennessee reported $8,596,621 in sports betting taxes for December 2023. Virginia reported $8,465,775.88 during the same period. North Carolina could see similar tax revenue during the height of the football season.

How Are Taxes Distributed In North Carolina

The tax breakdown in North Carolina is as follows: $300,000 will be distributed to each of the 13 local schools annually to support athletic departments. The list of schools includes five HBCUs:

NC Schools Receiving $300,000 Annually From Sports Betting

  • Appalachian State University
  • East Carolina University
  • Elizabeth City State University
  • Fayetteville State University
  • North Carolina Agricultural & Technical State University
  • North Carolina Central University
  • University of North Carolina at Asheville
  • University of North Carolina at Charlotte
  • University of North Carolina at Greensboro
  • University of North Carolina at Pembroke
  • University of North Carolina at Wilmington
  • Western Carolina University
  • Winston-Salem State University

One million dollars will be allocated to the North Carolina Outdoor Engagement Commission. This will focus on supporting local youth programs, including travel and event organization. The remaining funds will be distributed as follows: 50% to the State’s General Fund, 30% to the North Carolina Major Events, Games and Attractions Fund, and the remaining 20% will go to the 13 listed local schools.

Bills Regulating Sports Betting Tax in North Carolina

The North Carolina sports betting tax is set by the sports betting bill HB 347. This measure places both the tax on sportsbooks and the tax on sports bettor winnings. Tax rates were discussed and confirmed by lawmakers in both the House of Representatives and Senate prior to the passing of the bill.

FAQs

Will I Be Taxed On Sports Betting Wins?

Yes. Sports betting winnings are a taxable income. Both federal and state taxes can be applied to all gambling winnings, including sports betting.

How Much Do I Need To Win Before I Have To Claim Winnings On My Taxes?

The Internal Revenue Service states that all gambling winnings over $600 are required to be claimed.

What Form Do I Need To Claim Gambling Winnings?

Gambling winnings are to be claimed on a Form W-2G.

What Happens If You Don’t Claim Sports Betting Winnings On Taxes?

There are several potential penalties for not claiming sports betting winnings on your taxes. Bettors can suffer an audit that could result in the IRS seizing assets. Additionally, bettors run the risk of increased withholding if the government forces them to pay instead of if they file their taxes. It is best to pay the sports betting taxes winning to avoid all legal troubles.